Refer to the Amazon.com financial statements, including Notes 1 and 3, in Appendix A at the end of this book. Answer the following questions.
Requirements
1.Which depreciation method does Amazon.com use for reporting in the financial statements? What type of depreciation method does the company probably use for income tax purposes? Why is this method preferable for tax purposes?
2.Depreciation expense is embedded in the operating expense amounts listed on the income statement. Note 3 gives the amount of depreciation expense. What was the amount of depreciation for 2005? Record Amazon's depreciation expense for 2005.
3.The statement of cash flows reports the purchases of fixed assets. How much were Amazon's fixed asset purchases during 2005? Journalize the company's cash purchase of fixed assets.